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Restricting employment benefits to married people is direct discrimination

Restricting employment benefits to married people is direct discrimination

Restricting employment benefits to married people is direct discrimination

Regional Capabilities:

February 10, 2014

Background

Under European law, the EU Directive 2000/78/EC (the Directive) provides a general framework to combat discrimination on the grounds of religion or belief, disability, age or sexual orientation in employment and occupation. This is the "principle of equal treatment" and this principle provides that there should be no direct or indirect discrimination on those grounds.

Facts

Mr Hay was an employee of Crédit Agricole (Company). The Company had entered into a national collective agreement under which it agreed to provide paid leave and a bonus when an employee married.

Mr Hay entered into a civil solidarity pact (PACS) in July 2007 with his male partner.The French Civil Code defines a PACS as a "contract entered into by two natural persons of age, of different sexes or of the same sex, to organise their life together". Mr Hay applied for paid leave and the marriage bonus, but the Company turned him down as he was not getting married.

In March 2008, Mr Hay brought an action seeking payment of the marriage bonus and the paid leave.The Labour Tribunal dismissed his action, stating that "the bonus granted in the event of marriage is not linked to employment but to marital status".The French Court of Appeal agreed with the Labour Tribunal's decision and Mr Hay appealed to the Court of Cassation. The Court of Cassation decided to stay the proceedings and asked the CJEU to interpret whether the Directive prohibited the Company's collective agreement from limiting benefits only to married employees.

The Judgment

The CJEU held that the Directive prohibited this limitation. As same sex couples could not marry under French law, they could not meet a marriage requirement directly. Therefore, a same sex couple in a PACS was in a comparable situation to an opposite sex married couple. That a PACS was open to opposite sex couples was irrelevant. The Court therefore found that limiting these benefits to married couples (and therefore opposite sex couples) was direct discrimination. As the Company had not pleaded any of the limited justifications for direct discrimination under the Directive, the Court found accordingly.

Comment

This case highlights the continuing push in the European courts to deal with discrimination claims by looking at the principles underlying the Directive.

A broadly similar approach was taken across other jurisdictions - see recent 9th Circuit Judicial Council decision in Re Fonberg, 2013 U.S. App. LEXIS 23826 (9th Cir. Nov. 25, 2013). In that case, health benefits were payable to married couples but not to same sex couples, who are in a status similar to UK civil partners. The Court found that this breached an Oregon statute prohibiting discrimination on grounds of sexual orientation.

For UK pensions, interest is focused on a potential upcoming appeal decision in Walker v. Innospec Ltd. In this case, an employment tribunal found that a statutory provision limiting equalisation requirements for civil partner survivor benefits to periods on or after 5 December 2005 was illegal under the Directive. This was despite the fact that the limitation appeared in primary legislation and is included in the Equality Act 2010.

Even if this case is not upheld, the DWP will review this limitation in July 2014 as part of its implementation of the Marriage (Same Sex Couples) Act 2013. This act currently includes the same temporal limitation on pension benefits for same sex married couples as applies to civil partners.

It will be sensible for trustees to be aware that they will likely need to consider whether to keep such a limitation in their scheme rules, as it seems to us that full equalisation is just a matter of time. In practical terms, the abolition of the limitation will probably have limited cost implications for schemes.

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We do not offer administration, actuarial or other pension consultancy services.

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